Blackstone $3.5bn property push expected ‘by December’

The portfolio of more than 20 properties is spread across cities down the eastern seaboard.

Blackstone is believed to be moving forward with plans for a sale or initial public offering of its $3.5 billion Australian logistics real estate portfolio, as it also weighs a divestment of its Fife Capital-managed portfolio of properties in the same sector.

Blackstone has declined to comment on its intentions.

However, there is talk in the market that the private equity fund is close to offically appointing banks for a dual track process of the $3.5bn parcel of industrial properties in Australia, with at least two expected to be on the ticket for what could be one of the largest real estate deals this year.

Investment banks best placed to work on a trade sale or IPO of the $3.5bn industrial portfolio are JPMorgan, given that it has worked with Blackstone in the past, and Morgan Stanley following the recent appointment of ex UBS real estate operative Tim Church as its Australian chairman.

DataRoom understands that the New York-based private equity fund is in the planning process for a potential sale or float by as early as December as industrial real estate remains relatively unscathed from trading disruptions linked to COVID-19 and with booming conditions for internet shopping.

Globally, Blackstone manages $US167bn of real estate and its Australian operations are under the watch of Chris Tynan.

The private equity fund has typically not opted for IPOs when it comes to selling real estate portfolios in the past, although it did list a Real Estate Investment Trust in India last year.

However, demand for investments that offer a yield amid a low interest rate environment remains strong, and some suspect that the private equity fund would achieve a higher price for the portfolio through an initial public offering rather than a trade sale.

Last week, DataRoom reported that Blackstone was exploring a move to offload its $700m portfolio of Australian industrial properties managed by Fife Capital.

Allan Fife owns about 10 per cent of the industrial portfolio through his Fife Capital business, while Blackstone owns the remainder.

It is understood that Mr Fife is keen to retain his holding.

The portfolio of more than 20 properties is spread across cities down the eastern seaboard.

Blackstone hired Rothschild and real estate agency JLL for a sales process at the start of the year.

However, the process was placed on hold at the onset of the coronavirus outbreak.

But since February, industrial properties have sold for bullish prices.

In June, Charter Hall and its backers paid $648m for a sale and lease back of the ALDI logistics properties in Sydney, Melbourne and Brisbane and acquired the factories from the glass bottle maker Owens Illinois the following month for $215m in another sale and lease back deal.

This came after Centuria purchased two Arnott’s Biscuits factories from Kohlberg Kravis Roberts in Queensland and South Australia for $236m in December, with the sites to be leased back to the Tim Tams, Shapes and Mint Slice biscuits manufacturer.